🏭 The Column: Nov 15, 2023
Exxon and lithium, the helium auction, ADNOC, Lummus and Citroniq, Heirloom, and Solidia.
Good morning. This week was relatively quiet in the world of chemicals, but still plenty to chew on: Exxon is going to start drilling for lithium?
Ethanol and CO2 pipelines
If capturing CO2 is half of the technical problem, then finding somewhere to put that CO2 is the other half. If you believe in The Internet of Materials then it could all happen in one place, but unfortunately that’s not realistic, so we have pipelines. But not all CO2 pipeline propositions should be viewed from the same lens, mostly because CO2 emitters aren’t equal. Ethanol producers, for example, inherently produce very pure CO2 when they ferment corn—the kind of CO2 that is fit for use by soda producers, etc. In short: their CO2 isn’t the problem, and blending ethanol into gasoline isn’t much of a solution anyways. So maybe don’t build a CO2 pipeline if it’s for ethanol producers? Stanford’s Mark Jacobsen did some math to hash it out. [LINK]
What’s Going On:
Now Exxon drills for lithium
Back in May we watched Exxon buy the mineral rights to 120,000 acres in the Smackover Formation—a geologic formation in Arkansas that houses one of the world's most bromine-rich subsurface brines. Earlier this week they announced plans to drill into that formation, extract lithium directly from the brine (it’s not just bromine in there!), and then process the precipitated lithium into battery-grade lithium (either lithium carbonate or lithium hydroxide) on-site. It’s hard to know what will come of it, but I can tell you a few things: 1) direct lithium extraction will scale a lot better than mining and crushing spodumene, 2) the investment needed to enter the lithium market is just a tiny fraction of Exxon’s capital, and 3) there hasn’t been very much exploration (the E part of E&P) when it comes to lithium, and extraction costs are a function of concentration (i.e. finding higher concentrations is where the money is). So Exxon can probably expand in this market faster than the incumbent lithium producers. [LINK]
Air Products and helium issues
After it's produced (by the radioactive decay of uranium and thorium deep underground), helium starts its escape to space. Some of it gets trapped inside rocks along the way, which is why most of the world's helium is a by-product of natural gas production (we find helium in raw natural gas). And, on top of being both a) non-renewable, and b) incredibly scarce, helium is and irreplaceable component in quite a few critical applications (semiconductors, MRI machines, and obscure applications in rockets, nuclear, and the military). The government was more concerned with balloons in 1929 when they set up the Federal Helium Reserve in Amarillo, Texas, but long story short: that reserve and its associated system are being privatized (the US is selling the assets via an auction). But Air Products, an industrial gas producer, isn’t on-board. They don’t want to buy the assets (maybe because they aren’t well run?), and they don’t want someone else to either. The motioned to halt the auction, but it was denied by the court. [LINK]
ADNOC on a spending spree
Abu Dhabi’s oil and gas company, ADNOC, has been poking around and looking to make a petrochemical acquisition. First, rumors about ADNOC acquiring Covestro popped up in June, but then they offered them $11bn a couple of months later, and now they’ve been “in talks” with Covestro for a couple of months. There were rumors back then about their interest in Braskem as well, but now there’s an offer on the table: they’re looking to acquire Novonor’s 38.3% stake in Braskem for $2.1bn. It’s all just an extension of their desire to integrate downstream. That’s why they bought 25% of Austria’s OMV this time last year (who, by the way, is also in talks with ADNOC right now—but they are considering a big $20bn merger). [LINK]
Lummus and Citroniq
We make propylene by cracking naphtha or ethane, or by dehydrogenating propane. Sustainable routes to the molecule (and its derivatives) are few and far between, which, despite its poor conversion and cost, has started to make the route from ethanol (from fermented corn) to propylene look more appealing. Citroniq was founded by a couple of ex-petrochemical execs to commercialize some technologies that already exist, and Lummus licenses. It’s pretty similar to how pyrolysis plants can pop up quickly regardless of their long-term economic feasibility. [LINK]
Heirloom’s first DAC plant
It’s hard not to talk about direct air capture (DAC) when so much money is flowing into it. Heirloom is one of many DAC startups, but what makes them interesting is the simplicity of their model: instead of trying to get fancy with expensive adsorbing materials, just accept that DAC is an energy intensive operation and capture CO2 by reacting it with calcium oxide (produced by heating limestone with an electric kiln) to make more limestone. If you have a high-value application for that CO2, and you’re being handed cash for tax credits, then maybe the route’s thermodynamic cost isn’t so absurd. [LINK]
Solidia started up their pilot line
One interesting high-value application for CO2 is cement, largely because the market for cement is so large (you’re going to need a large market for all that emitted CO2). Solidia is looking to enter this space with their CO2-based Supplementary Cementitious Material (SCM)—a cement substitute. (For clarity: cement is an ingredient in concrete, and we normally make cement by combining limestone with sand in a very hot kiln.) Solidia’s pilot plant just started up outside of San Antonio, Texas. [LINK]
Other Things Happen:
A new soda ash plant in Saudi Arabia just started doing trial runs. Indian Oil is going to license one of LyondellBasell’s technologies. Oxiteno is going to source bio-attributed ethylene from Braskem. BlackRock directly invested $550 million into a DAC plant. The EIA is saying that the US’s LNG export capacity will double by 2027. Lanxess is going to try to divest its polyurethanes business.